Exhibit
10.1


 


SECOND AMENDMENT TO


CREDIT AGREEMENT


 


THIS
SECOND AMENDMENT TO CREDIT AGREEMENT (the “Second Amendment”) made and
entered into the 18th day of December, 2009, by and between CUBIC ENERGY, INC., a Texas corporation,
and WELLS FARGO ENERGY CAPITAL, INC.,
a Texas corporation.


 


W  I  T  N  E  S  S
E  T  H:


 


WHEREAS,
the above named parties did execute and exchange counterparts of that certain
Credit Agreement dated as of March 5, 2007 as amended by that certain
First Amendment to Credit Agreement dated May 8, 2008 (collectively the “Agreement”)
to which reference is here made for all purposes;


 


WHEREAS,
the above named parties are desirous of amending the Agreement and certain
related agreements and instruments in the particulars hereinafter set forth;


 


NOW
THEREFORE, in consideration of the mutual covenants and agreements of the
parties to the Agreement and agreements of the parties hereto as set forth in
this Second Amendment, the parties hereto agree as follows:


 


ARTICLE I


DEFINITIONS


 


As
used herein, each term defined in the Agreement shall have the meaning assigned
thereto in the Agreement and terms defined herein shall be incorporated into
the Agreement unless expressly provided to the contrary.


 


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ARTICLE II


AMENDMENTS


 


2.01                           The Agreement
is hereby amended to add the following defined terms to Section 1.1 of the
Agreement:


 


“Amended and Restated Registration Rights Agreement” means the
Amended and Restated Registration Rights Agreement in the form attached as Exhibit XVII,
executed by the Borrower and the Lender superseding the Registration Rights
Agreement.


 


“Amended and Restated Warrant” means the Amended and Restated
Warrant in the form attached as Exhibit XVIII, executed by the Borrower
and acknowledged by the Lender, superseding the Warrant


 


“Second Warrant” means the Stock Purchase Warrant issued by the
Borrower to the Lender in the form attached as Exhibit XIX.


 


“Wallen Note” means that certain Subordinated Promissory Note
dated December 18, 2009 executed by the Borrower to the order of Calvin A.
Wallen III in the principal amount of $2,000,000.00, a photocopy of which is
attached hereto as Exhibit XX.


 


2.02                           The Agreement
is hereby amended to substitute for the definition of “Borrowing Base Period” the
following:


 


“Borrowing Base Period” means the period commencing on December 18,
2009 and ending on February 28, 2010, and thereafter each six (6) month
period commencing March 1 and September1 of each year.


 


2.03                           The Agreement
is hereby amended to substitute for the definition of “Loan Documents” the
following:


 


“Loan Documents” means this Agreement, the Notes, the Security
Documents, the assignments of Net Profits Interests, all agreements, documents
and instruments governing or related to Derivative Contracts entered into
between the Borrower and the Lender or any Affiliate of the Lender, the
Warrant, the Supplemental Warrants, the Registration Rights Agreement, the
Amended and Restated Registration Rights Agreement, the Amended and Restated
Warrant, the Second Warrant and all other notes, mortgages, deeds of trust,
restatements, ratifications and amendments of mortgages, deeds of trust,
financing statements,


 


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guaranties,
security agreements, pledge agreements, documents, instruments and other
agreements now or hereafter delivered pursuant to the terms of, or in
connection with, this Agreement, the Obligations and/or the Collateral, and all
renewals, extensions and restatements of, and amendments and supplements to any
or all of the foregoing.


 


2.04                           The Agreement
is hereby amended to substitute for the definition of “Revolving Note” the
following:


 


“Revolving Note” means that certain promissory note in the
principal face amount of $40,000,000.00 dated December 18, 2009 made by
the Borrower to the order of the Lender, in the form attached hereto as Exhibit I,
together with all deferrals, renewals or extensions thereof, which promissory
note shall evidence the Revolving Advances made to the Borrower by the Lender
pursuant to Section 2.1.


 


2.05                           The Agreement
is hereby amended to substitute for the definition of “Termination Date” the
following:


 


“Termination
Date” means July 1, 2012.


 


2.06                           The Agreement
is hereby amended to substitute for Section 2.4 of the Agreement
following:


 


2.4                               Use of Proceeds. The Borrower shall use the
proceeds of the Revolving Loans for general corporate purposes.


 


2.07                           The Agreement
is hereby amended to substitute for Subsection 2.6(a) of the Agreement the
following:


 


(a)                                  During the period
from and after December 18, 2009 until the next scheduled redetermination
of the Borrowing Base (scheduled to be March 1, 2010) in accordance with
this Section 2.6, the amount of the Borrowing Base shall be
$25,000,000.00.


 


2.08                           The Agreement
is hereby amended to substitute for Subsections 2.15 (d) and (e) of the
Agreement the following:


 


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(d)   Registration Rights. The shares of Common
Stock issued to the Lender pursuant to this Section 2.15, along with any
shares of Common Stock issued upon exercise of the Amended and Restated Warrant
or the Second Warrant, shall be entitled to the registration rights set forth
in the Amended and Restated Registration Rights Agreement.


 


(e)   Compliance with Other Provisions.  The Borrower shall comply with its covenants
and agreements contained in the Amended and Restated Registration Rights
Agreement, the Amended and Restated Warrant and the Second Warrant, as if those
provisions were included in this Agreement. 
Notwithstanding anything herein to the contrary, the obligation provided
in this Subsection 2.15(e) and in Subsection 2.15(f) shall remain in
force and effect so long has the Lender is holder of the Amended and Restated
Warrant, the Second Warrant or shares of Common Stock issued to it pursuant to
this Section 2.15 or shares of Common Stock issued upon exercise of the
Amended and Restated Warrant or the Second Warrant.


 


(f)   Listing of Shares Issuable. To the extent
the Common Stock is listed on the NYSE Amex LLC or other national securities
exchange, the Borrower shall at all times cause to be listed for trading on the
NYSE Amex LLC or any other national securities exchange that is the principal
market for the trading of the Common Stock (a) all of the shares of Common
Stock issuable if the Term Note is converted in full pursuant to Section 2.15
of the Agreement, as that number of shares may be adjusted from time to time
pursuant to the Antidilution Provisions, and (b) all of the shares of
Common Stock to be issued if the Amended and Restated Warrant is exercised in
full. In addition, within sixty (60) days after the issuance of the Second
Warrant, the Borrower shall cause all of the shares issuable upon the exercise
in full of the Second Warrant to be listed for trading on the NYSE Amex LLC or
such other national securities exchange that is the principal market for the
trading of the Common Stock.


 


2.09                           The Agreement
is hereby amended to substitute the second sentence of Section 5.24 of the
Agreement the following:


 


This
obligation shall be in addition to the Borrower’s obligation to reserve shares
of Common Stock for exercise of the Amended and Restated Warrant and the Second
Warrant as provided in those respective instruments.


 


2.10                           The Agreement
is hereby amended to substitute for Section 5.5 of the Agreement the
following:


 


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5.5                               Reserve Reports. Commencing August 1,
2010, and semi-annually thereafter, as soon as available but in any event no
later than February 1 and August 1 of each year, the Borrower shall
deliver to the Lender (a) a report, in form and substance satisfactory to
the Lender, prepared by Scotia Group, Inc., or another independent
petroleum engineer or firm of engineers reasonably acceptable to the Lender,
which report shall set forth, as of January 1 or July 1 of such year
respectively, projections of future net income from hydrocarbons classified as
Proved Reserves attributable to all of the Subject Properties and (b) such
other information concerning such Oil and Gas Properties as the Lender may
request, including, without limitation, engineering, geological and performance
data.


 


2.11                           The Agreement
is hereby amended by the addition of the following section to Article 5 of
the Agreement:


 


5.25                        Notice of Price Adjustment.  At least two
Business Days prior to the occurrence, the Borrower shall give notice to the
Lender of any event that would cause either (a) an adjustment to the
Conversion Price pursuant to the Antidilution Provisions, or (b) an adjustment
to the exercise price provided in the Amended and Restated Warrant or the
Second Warrant pursuant to Sections 4 or 5 of those instruments.


 


2.12                           The Agreement
is hereby amended to substitute for Section 6.1 of the Agreement the
following:


 


6.1                               Other Debt of Borrower.  The Borrower will not incur, create, assume
or suffer to exist any Debt except: (a) Loans hereunder, (b) unsecured
current accounts payable incurred in the ordinary course of business, provided
such accounts are paid timely or within ninety (90) days of the due date or are
being Contested in Good Faith, (c) pursuant to Derivative Contracts
required or allowed under this Agreement, (d) evidenced by the Wallen Note
or (e) other Debt not exceeding $250,000.00 in the aggregate at any one time.


 


The Borrower shall not repay any Debt, principal or interest, evidenced
by the Wallen Note; provided, however, so long as no Event of Default or
Unmatured Event of Default exists or would exist as a result thereof, the
Borrower may make regularly scheduled interest payments accruing on the
principal outstanding under the Wallen Note.


 


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ARTICLE III


LIMITED WAIVER


 


3.01                           Subject to the
conditions precedent set forth in Article IV of this Second Amendment, and
subject to the limitations herein set forth, the Lender waives the Events of
Default (if any) caused by or related to the Borrower’s failure to comply with
the covenant to satisfy the difference between the Borrowing Base as
redetermined by the Lender pursuant to Section 2.6 of the Agreement and
the principal outstanding Debt evidenced by the Revolving Note as set forth in Section 2.13
of the Agreement as set forth in a letter from the Lender to the Borrower dated
June 26, 2009. Notwithstanding anything contained in this Section 3.01,
the parties hereto do not assert that any Event of Default has and was
continuing.


 


3.02                           The scope of
the waivers by the Lender evidenced hereby is expressly limited to the Events
of Default described above in this Article III and does not extend to any
other or future Event of Default. Except as specifically set forth in Section 3.01
of this Second Amendment, the waivers by the Lender evidenced hereby do not
constitute a waiver of any future non-compliance by the Borrower with any
covenant contained in the Agreement.


 


ARTICLE IV


CONDITIONS


 


This
Second Amendment shall not be effective until the following conditions have
been satisfied, with all documents to be delivered to the Lender to be in form
and substance satisfactory to the Lender:


 


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(a)                                The Lender
shall have received the following documents, appropriately executed and
acknowledged and in multiple counterparts as requested by the Lender:


 


(1)                                This Second
Amendment executed by each party hereto;


 


(2)                                Revolving Note
executed by the Borrower in the principal face amount of $40,000,000.00;


 


(3)                                Term Note
executed by the Borrower in the principal amount of $5,000,000.00;


 


(4)                                Certificates of
the appropriate Tribunals of the State of Texas, dated reasonably near the date
of this Second Amendment, to the effect that the Borrower is duly incorporated
and in good standing with respect to the payment of all franchise and similar
Taxes;


 


(5)                                Certificates of
the appropriate Tribunals of the State of Louisiana, dated reasonably near the
date of this Second Amendment, to the effect that the Borrower is duly
qualified as a foreign corporation and in good standing with respect to the
payment of all franchise and similar Taxes;


 


(6)                                A copy of the
articles of incorporation of the Borrower and all amendments thereto,
accompanied by a certificate issued by the secretary of the Borrower that such
copies are correct and complete;


 


(7)                                A copy of the
by-laws of the Borrower and all amendments thereto, accompanied by a
certificate issued by the secretary of the Borrower that such copies are
correct and complete;


 


(8)                                A copy of the
corporate resolutions of the Borrower, approving this Second Amendment and the
related Loan Documents to which it is a party and authorizing the transactions
contemplated therein, duly adopted by its board of directors and accompanied by
a certificate of the secretary of the Borrower to the effect that such copy is
a true and correct copy of resolutions duly adopted by written


 


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consent or at a meeting of the board of directors, that such
resolutions constitute all the resolutions adopted with respect to such
transactions, and that such resolutions have not been amended, modified or
revoked in any respect, and are in full force and effect as of the date of this
Second Amendment;


 


(9)                                The following
documents creating, evidencing and perfecting Liens in favor of the Lender to
secure the Obligations:


 


(i) an Act of Second Supplement and Amendment to Mortgage,
Collateral Assignment, Security Agreement and Financing Statement between the
Borrower and the Lender; and


 


(ii) UCC Financing Statement amendments associated with the
document described in (i) above;


 


(10)                          the Amended and
Restated Warrant executed by the Borrower and acknowledged by the Lender;


 


(11)                          the Second
Warrant executed by the Borrower;


 


(12)                          the Amended and
Restated Registration Rights executed by the Borrower and the Lender; and


 


(13)                          Such other
agreements, documents, instruments, opinions, certificates, waivers, consents,
and evidence as the Lender may reasonably request in compliance with or to
accomplish the terms and provisions of any of the Loan Documents; and


 


(b)                               The Lender
shall have received the fee for the increase in the Borrowing Base pursuant to Section 2.10.


 


ARTICLE V 

REPRESENTATIONS AND WARRANTIES


 


The
Borrower hereby expressly remakes in favor of the Lender all of the representations
and warranties set forth in ARTICLE 4 of the Agreement, as amended


 


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hereby, and represents and
warrants that all such representations and warranties remain true and
unbreached, except as affected by the transactions contemplated in the
Agreement.


 


ARTICLE VI


RATIFICATION


 


Each
of the parties hereto does hereby adopt, ratify and confirm the Agreement, in
all things in accordance with the terms and provisions thereof, as modified or
amended by this Second Amendment.


 


ARTICLE VII


MISCELLANEOUS


 


7.01                           All references
to the Agreement in any document heretofore or hereafter executed in connection
with the transactions contemplated in the Agreement shall be deemed to refer to
the Agreement as amended by this Second Amendment.


 


7.02                           This Second
Amendment may be executed in two or more counterparts and multiple originals of
such counterparts, and it shall not be necessary that the signatures of all
parties hereto be contained on any one counterpart hereof.  Any executed Second Amendment or any counterpart
thereof shall be deemed an original, but all of which together shall constitute
one and the same instrument.


 


7.03                           THE CREDIT AGREEMENT (AS AMENDED BY THIS SECOND AMENDMENT) AND THE OTHER
LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT
BE CONTRADICTED BY EVIDENCE OR PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.


 


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THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.


 


7.04                           THIS SECOND AMENDMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER, AND
SHALL BE CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS.


 


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IN WITNESS WHEREOF, this Second Amendment to Credit Agreement is
executed as of the date first above written.


 


 


	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  CUBIC ENERGY, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Calvin A. Wallen III

  
	
   

  	
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LENDER:

  
	
   

  	
   

  
	
   

  	
  WELLS FARGO ENERGY
  CAPITAL, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Printed Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
				



 


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